Keppel Energy Pte Ltd, a wholly-owned subsidiary of Keppel Corporation, has secured a long-term supply of natural gas worth more than S$3 billion based on current gas prices from Petroliam Nasional Berhad (Petronas), the national oil and gas company of Malaysia.

Keppel Energy will be the first company in Singapore to bring natural gas from Malaysia into Singapore’s main gas network.

The natural gas will be used to power Keppel Energy’s 500MW cogeneration plant under construction on Jurong Island. The gas supply agreement (GSA) will be assigned to Keppel Gas Pte Ltd. Keppel Gas will be a shipper and importer of natural gas to supply the natural gas to the cogeneration plant and to other industrial and commercial customers.

Under the agreement, up to 120 billion BTU per day of natural gas will be delivered to Singapore for a period of about 18 years from the first gas via a new 5km pipeline to be jointly constructed by Keppel Gas and Petronas Gas Bhd, a subsidiary of Petronas. Delivery of gas is expected to commence in the middle of 2006.

Choo Chiau Beng, senior executive director of Keppel Corporation, says: “This important milestone marks our strong confidence in the fundamentals of the liberalised Singapore energy markets.

“Upon the completion of the new gas pipeline, Singapore, Malaysia and Indonesia will be interconnected, paving the way for the TransAsean Gas Pipeline (TAGP). The interconnection provides further security of supply to Singapore and other connected countries.”

Ong Tiong Guan, managing director of Keppel Energy, adds: “The conclusion of the GSA has created a new business for us through Keppel Gas, in line with our strategy of achieving return-driven growth in the energy business through selective development. It provides the platform for Keppel Energy to seek further growth options in the Singapore electricity and gas markets including the potential LNG development in Singapore”.

A wholly-owned subsidiary of Keppel Corp, Keppel Energy has a track record of developing, owning and operating power plants in Brazil, China, Philippines and Nicaragua. In Singapore, Keppel Energy, through its subsidiary Keppel Electric, an independent electricity retailer, is supplying electricity to business and industrial users, and through its subsidiary Keppel Merlimau Cogen is building a 500MW cogeneration plant.